Author(s)

JuanJuan Huang

Affiliation(s)

School of Business Administration, Baise University, Baise 533000, Guangxi, China.

Corresponding Author

JuanJuan Huang

ABSTRACT

This paper aims to explore the challenges posed by the digital economy to the tax system and its corresponding policy responses. Through a review of relevant literature and theoretical analysis, the study finds that the intangibility, global nature, and liquidity of the digital economy have profound impacts on traditional tax systems, leading to issues such as base erosion and profit shifting, which in turn affect tax revenues and the distribution of social wealth in various countries. In response to these challenges, governments have begun to adopt innovative tax policies, such as the Digital Services Tax (DST), although its implementation faces difficulties in international coordination. At the same time, tax authorities need to enhance their digital management capabilities and utilize new technologies to improve the efficiency of tax collection and administration. The study shows that policymakers need to find a balance between the flexibility and stability of tax policies and strengthen international cooperation to achieve tax equity and sustainable economic development.

KEYWORDS

Digital economy; Tax system; Base erosion; Profit shifting; Policy response; Digital Services Tax; International cooperation

CITE THIS PAPER

JuanJuan Huang. Research on tax challenges and policy responses in the era of digital economy. Social Science and Management. 2024, 1(2): 1-4. DOI: https://doi.org/10.61784/ssm3011.

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